Brexit negotiators reach outline of historic trade accord

U.K. and European Union negotiators have reached the outline of a post-Brexit trade agreement, and are now working to finalize the wording of the deal after almost ten months of often fraught deliberations.

The accord still needs to be approved by British Prime Minister Boris Johnson and the EU, according to officials with knowledge of the matter. That means the deal could still fall apart, and any announcement could be some hours away, they said.

The pound soared, advancing by as much as 1.6% to $1.3571, for its biggest intraday gain in more than a week. The yield on 10-year U.K. government bonds was poised for the biggest gain since March.

Johnson and European Commission President Ursula von der Leyen intervened personally in recent days, holding several phone conversations in a last-ditch bid to reach an agreement before the U.K. leaves the single market at the end of the month.

If they can pull off an accord, it would draw a line under almost five years of often tempestuous negotiations since the U.K. voted to withdraw from the EU in 2016 and lay the foundations for Britain to trade and collaborate with the bloc going forward. Hundreds of trucks backed up around the southern English port of Dover earlier this week had offered a sobering reminder of the potential consequences of ending Britain’s transition period on Dec. 31 without a deal.

Negotiations resumed early on Wednesday in the commission’s Berlaymont headquarters in Brussels, with discussions focused on what access EU boats will have to British waters, and what rights the EU will have to impose retaliatory tariffs should the U.K. limit that access in the future.

Both sides have made an agreement on fishing a precondition for any wider deal over their future relationship, even if the 650 million euros ($790 million) of fish European boats catch in U.K. waters each year is a fraction of the 512 billion euros of goods traded annually between Britain and the EU.

Michel Barnier, the bloc’s chief negotiator, told a meeting of ambassadors from the 27 EU member states Tuesday that there had been progress in the talks, and a deal could be signed before Christmas—if the British are prepared to compromise further on fishing, according to diplomats briefed on the discussions. The talks could continue beyond Christmas, or fail completely, he told the private meeting.

Senior EU officials said the decision lies with Johnson, while people familiar with the British side said the onus was on the Europeans to move.

Diplomats in the EU’s working group have discussed how a potential agreement could be put into effect by Jan. 1 even though there isn’t enough time for formal ratification by the EU Parliament. While such procedural preparations aren’t in themselves proof a deal has been reached, they signal that the bloc is preparing for one.

If an agreement is struck, the commission will publish the draft unofficial text and send it to member states and the European Parliament, according to a diplomat briefed on the preparations. EU government envoys in Brussels will have two days to discuss and approve the draft, according to the plan. Then a written procedure for the signing of the free trade agreement will follow, so that it can be published in the official journal of the European Union by Dec. 31.